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Universal Health (UHS) Q2 Earnings & Revenues Lag Estimates

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Universal Health Services Inc. (UHS - Free Report) reported second-quarter 2017 adjusted earnings of $1.94 per share, which missed the Zacks Consensus Estimate by 6.3%. Earnings remained flat year over year.

Net revenue declined 7.4% year over year to $2.61 billion. It also missed the Zacks Consensus Estimate by 0.8%.

Total expenses were $2.3 billion at the end of second quarter, up 9% year over year.

Segment Update

Acute Care Hospitals: Adjusted admissions and adjusted patient days increased 6% and 2.7%, respectively, over the prior-year quarter. Net revenue from acute care services climbed 5.1% in the quarter.

Behavioral hospitals: On a same facility basis, adjusted admissions increased 3.7% while adjusted patient days rose 1.4% on a year-over-year basis. Net revenue decreased 1.4% during the second quarter.

Financial Update

As of Jun 30, 2017, the company had cash and cash equivalents of nearly $66.4 million, up 97% from year-end 2016.

Total assets were $10.5 billion as of Jun 30, 2017, up 2.3% from year-end 2016.

The company managed to lower its debt burden, as evident from the long-term debt of $3.9 billion as of Jun 30, 2017, which declined 1% from year-end 2016.

For the first six months of 2017, net cash provided by operating activities decreased 36% to $534 million over the comparable six-month period of 2016.  The downside stemmed from a $217 million unfavorable change in other working capital accounts. This resulted primarily from changes in accrued compensation and accounts payable due to timing of disbursements and a $92 million unfavorable change in cash flows from foreign currency forward exchange contracts related to investments in the U.K. 

Buyback Program

In Feb 2016, the board of directors authorized a $400 million increase to Universal Health’s stock repurchase program. This raised the aggregate authorization to $800 million from the previous authorization of $400 million in third-quarter 2014. 

Concurrently, during the second quarter, the company repurchased 983,900 shares at an aggregate cost of $115.9 million.

During the first six months of 2017, the company repurchased approximately 1.1 million shares at an aggregate cost of approximately $127.1 million

Since the inception of the program on Jun 30, 2017, Universal Health bought back approximately 4.49 million shares at an aggregate cost of approximately $525.3 million. 

Based upon the operating trends and financial results experienced during the first six months of 2017, Universal Health has revised the estimated range of its adjusted earnings to $7.50 to $8.00 per diluted share from the previously provided range of $7.70 to $8.20.

Universal Health Services, Inc. Price, Consensus and EPS Surprise

2017 Guidance

Based upon the operating trends and financial results experienced during the first six months of 2017, Universal Health has revised the estimated range of adjusted earnings to $7.50 to $8.00 per diluted share from the previously provided range of $7.70 to $8.20 per diluted share.

Zacks Rank & Stocks to Consider

Universal Health presently carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among the other firms in the medical sector that have reported their second-quarter earnings so far, the bottom line of Centene Corp. (CNC - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their respective Zacks Consensus Estimate.

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